Dark Fiber Lights Up: Gigabit Competition Increases in Denver

Certain things creep up in price every year: insurance premiums, cell phone bills, rent and often broadband prices.

The last is a side effect of a lack of competition for Denver residents, but it may also be changing as companies like GigaMonster enter the market and promise faster speeds at lower prices than the two giant Internet service providers (ISPs), Comcast and CenturyLink. Another local company, FORETHOUGHT.net, is looking into providing a different type of high-speed service that could provide even lower-cost, high-speed access.

The key here is accessing the dark fiber in the city -- the unused fiber-optic network that's been laying dormant under the city's streets and sidewalks. Optical fiber operates -- literally -- at the speed of light, meaning it's able to carry more information than phone or cable lines at a far higher speed.

Many telecommunications companies use fiber-optics as the backbone for their networks, but the ability to connect that backbone to homes and apartments and offer speeds of a gigabit per second (1,000 megabits per second) is just getting underway.

Going gig

The U.S. isn't exactly setting the world on fire in terms of Internet speed: It was 17th at last count. Even in this context, Denver isn't quite on the leading edge. The city hasn't made PC Mag's top 10 lists of cities with the fastest broadband service in the U.S. in recent years, just as Colorado hasn't emerged in the upper echelon of speedy states in Akamai's annual State of the Internet reports.

GigaMonster is launching in Denver in 2016.This could change in a hurry. GigaMonster, a San Francisco-based company, is entering Denver this spring, offering Internet services of up to one gigabit per second. However, "Initially, we only be serving multi-family communities," explains Bill Dodd, GigaMonster's CEO. He says the company, which now offers services in about 15 U.S. markets specializes in multi-dwelling units (MDUs) like apartment or condo complexes.

Most people don't need a gigabit connection in their home -- yet. "The sweet spot is definitely in the 100-megabit range," says Dodd, noting there's not much difference in price between 100- and 50-megabit service. "The people getting the gigabit service are working on supercomputers," he adds. "Most of it is Maserati effect. Some
people just like to have a gigabit service, they think it's cool."

But as more devices come online in a home, that's likely to change. In 2014, the FCC recommended at least a four-megabit connection for advanced activities like online gaming or streaming HD video and an "advanced service" of more than 15 megabits for homes with four or more devices.

GigaMonster offers Internet access speeds starting at 30 megabits. "Typically the 30-megabit service is in the the $39 [per month] range, the 100-megabit service is $49 to $59 and the gigabit is in the $69 to $119 range," Dodd says. "All of our pricing -- as is most of our competitors’ -- is market-sensitive. The community can purchase the Internet in bulk and sell it to residents through a bulk program charged through rent or homeowners' dues. They get a much better price that way."

For comparison, Comcast's Xfinity service, which likely has the broadest high-speed Internet coverage in Denver, offers a 10-megabit service at $49.95 per month, a 150-megabit service at $89.95 and a 250-megabit service at $149.95 per month. (These prices do not include promotional periods.)

"Our speeds are offered across the footprint," says Mike Spaulding, Comcast Mountain West Region's vice president of engineering. "You can get up to two-gigabit service later this year and next year." The company will offer gigabit speeds across its cable service as well, he adds, meaning that customers in older neighborhoods with wired connections will have access to the upper echelon of Internet speeds. He estimates one-gigabit service will cost around $139 a month.

Similarly, "CenturyLink covers most of the Denver metropolitan area with our broadband services. We offer speeds ranging from 10 megabits to one gigabit," Mark Soltes, the company's assistant vice president of public policy and government relations for Colorado, writes via email. Residential Internet service starts at $39.95 a month plus $9.95 a month for 60-megabit services for the first year, but he company doesn't publicize post-promotion prices.

FORETHOUGHT.net Founder and CEO Jawaid Bazyar.CenturyLink is still rolling out its fiber network in Denver. "It's going to take them a long time to put their fiber everywhere," says Jawaid Bazyar, president of FORETHOUGHT.net, another ISP in Denver that's offering gigabit service in the city. "I think it will take them 10 years even if they're aren't any economic slowdowns."

Bazyar's company has offered broadband services in Denver since 1995, so he's acutely aware of the challenges to running fiber out to buildings and homes in Denver. "There's a lot of construction going on in Denver in telecommunications," he explains. "Because of that, contractors are getting high premiums on their work these days. A project we bid at $40,000 18 months ago just bid it at twice that."

Like GigaMonster, FORETHOUGHT.net is focused on expanding Internet services to MDUs in Denver. "In the MDUs, we follow Google's lead," Bazyar says. "We're doing a $70 gigabit package and about a $40, 100-megabit package."

Despite the competitive prices, uptake remains slow, he notes. "The key challenge is not the interest or the market demand. I get 15 people a day calling or emailing saying I wish I had more than a choice between Comcast and CenturyLink," Bazyar adds. "At the end of the day when we're talking about MDUs, we've had a really hard time in the Denver market getting the attention and cooperation of landlords. . . . TAXI in RiNo, I can't get them to return a phone call to save my life."

One of the problems, according to Bazyar, is that Colorado doesn't require building owners to accept all telecom carriers as some states do. He contends that project developers can get paid "door fees" for allowing Comcast and CenturyLink access to their projects. "Even though FCC rules are that you cannot legally have an exclusive on telecom services in buildings, simply failing to return phone calls is a de facto exclusive," he argues.

A growing web

"We've probably got more fiber miles than anybody," says Comcast's Spaulding says. "Many of our new MDUs and single-family units are being deployed with fiber today. . . . That's our first option in new builds right now."

It's a huge infrastructure investment for both Comcast and CenturyLink, but not upstarts like GigaMonster. "Our capital cost per subscriber is probably 1/40th of what our competitors spend," Dodd says. "We're never going to get in a price war that we can't win." By focusing first on MDUs, the company essentially has a captive market and doesn't have to spend much on advertising, he notes.

GigaMonster's been working in the dark for a long time, Dodd says. "Denver's really our coming-out party for the media. We're pretty excited about letting the world know we're no longer flying under the radar."

"Dating back to early 2000s, we got really good at acquiring, managing, lighting and creating fiber," he continues. "We only operate off of fiber rings. We spent years amassing dark fiber in multiple markets and creating these rings. It's a huge infrastructure play. You have to control your fiber and control it end to end."

When GigaMonster launches into a new MDU -- one of its first will be the SkyHouse apartments slated to open next to the Brown Palace Hotel in fall 2016 -- it pipes a 10-gigabit service into a building to start, Dodd explains. "If at any time, it got within 70 percent of capacity, we would change the optics out which takes several hours. We'd make it 40 gigabits." It will continue to ramp up speed as needed for its customers, he adds.

The economics still have to make sense for these services. For GigaMonster, that's around 150 units. However, Dodd notes that if a 30-unit building was across the street from a much larger one, like a 250-unit building, it would make sense to offer the service in the smaller one as well.

The introduction of GigaMonster to the Denver market could be a boon for FORETHOUGHT.net, too. "We've seen that several times through the history of the Internet," Bazyar says. When new Internet services building managers and developers are wary, but after Qwest (CenturyLink's predecessor) spent millions advertising DSL service in Denver, people were more interested in FORETHOUGHT.net's services.

GigaMonster's arrival in Denver might just help catalyze cheaper broadband for the city at large, Dodd days. "When Google went into Atlanta, they lowered the price to $70 per gig -- the other providers came down to that price," he observes. "In Houston, they were at $119 for gigabit service and the competitors came down to that price."

There also might be some new high-speed Internet options coming to Denver. FORETHOUGHT.net has been deploying so-called last mile wireless in rural regions of Colorado. There the company is using fiber as the backbone, Bazyar explains, then beaming broadband into homes and businesses. He's looking into doing something similar in Denver.

Bazyar says the company is in talks with a key condo property downtown to provide gigabit service there and hopes to have an agreement in the next month or so. "The second part of the conversation with them is use of their roof for the wireless efforts. Then we'd have to replicate that for five to six places around metro Denver."

That type of service could offer wireless speeds of up to 500 megabits per second at a cost about a tenth of that of fiber: around $55 a month. "Hopefully, everyone would be impressed," he says.